By: Melissa Silver, Legal Editor at XpertHR
In this era of globalization, it has become increasingly popular for U.S. companies to expand businesses internationally. As a result, companies are employing staff in multiple countries, thereby creating challenges for HR. Global HR issues run the gamut, from developing the best methods for attracting talent overseas to terminating an employee abroad. Further, these staff may speak a foreign language and there may be cultural differences to consider.
These challenges are further compounded by the fact that there are such varied differences in employment laws between countries, especially between the U.S. and countries of other regions. Not only must an HR professional for a multinational organization be aware of such differences, but he needs to develop and implement strategies, practices and procedures in order to ensure compliance with each country’s laws.
The top four employment challenges that HR professionals face are the following:
1. Recruiting and selecting job candidates: This area in particular is challenging due to the numerous steps HR professionals must go through to recruit and select new hires. Country-specific requirements must be considered for job postings, job applications, interview questions and pre-employment screening measures. For instance, HR must take into account any quotas, local discrimination laws and statutory obligations when advertising for a position, ensuring that the job application does not ask any prohibited questions and taking into account any restrictions with respect to medical exams or drug tests.
2. Employment contracts: Outside of the U.S., most countries require an employment contract for any individual working in that country. In some countries, the written employment contract must contain certain minimum terms, such as the place of work, the hours of work and rest, annual leave and compensation. There are also country-specific statutory rights to consider, such as minimum hourly pay and the maximum number of hours an employee is allowed to work. Other considerations include whether the contract even needs to be in writing, the contract’s format and whether it needs to be in the employee’s native language.
3. Developing a compensation structure: This is a particularly challenging area if an employer wants to harmonize grading, terms, conditions and benefits between countries. When developing a structure, HR professionals for multinational employers need to consider whether there any cultural influences, such as seniority versus merit- (performance) based pay systems; the competitiveness for the positions in each country; a country’s current economic climate; taxes; cost of living; whether collective bargaining agreements have any impact on an employee’s terms and conditions, including compensation; and whether there is a national minimum wage and/or any equal pay laws. In order to create a competitive salary structure, HR should conduct a benchmarking survey so that it can gain insights on salaries for positions for a particular industry in a certain region, country or locality.
4. Terminating employment: Unlike in the U.S., where most employees are employed at-will and can be terminated for any reason without notice, most employment contracts in other countries contain provisions regarding termination of the employment relationship. HR needs to be aware that some countries only allow dismissals for cause or some other lawful grounds, such as insubordination or misconduct. HR also needs to consider if there are any notice requirements as well as any mandated severance payments when an employee is terminated.
Although it could be a daunting task to navigate the employment laws for each country, global HR professionals must do so in order to ensure compliance and to minimize exposure to employment claims.
Melissa A. Silver is the Legal Editor for the employment offer, terms of employment, new hire paperwork, negligent hiring, on-boarding and orientation, recordkeeping and minimizing liability content in the recruiting and hiring chapter of XpertHR. Prior to joining XpertHR, Melissa practiced law for 10 years. During the last eight years, Melissa engaged in private practice and focused on the defense of clients in cases involving harassment, discrimination and retaliation claims, as well as the enforcement of restrictive covenants. Melissa has successfully litigated cases before the New Jersey Superior Court, U.S. District Court, the EEOC and the New Jersey Division on Civil Rights.